Why you should always have a mortgage

H

handyandy

Hi All

Just came across this article and at the bottom there was this

http://www.couriermail.com.au/news/...-good-to-be-true/story-fndo1uez-1226489735283

NSW Fair Trading has issued fraud prevention guidelines to agents to combat the increase in scams following an incident in which a $1 million eastern suburbs unit was almost sold at auction without the overseas owner's knowledge

tEvery so often we get people on here that boast about having paid of their mortgage and one assumes that they have also then followed through and discharged their mortgage.

Doing the latter will suddenly limit the property checks in the legal selling process as there is no mortgage to deal with and I belief that the land titles office is not that thorough.

As a result any property that has no mortgage can be a target for unscrupulous sales action like those mentioned.

Personally we have many properties that have no actual money owing but none the less all of them have a mortgage with the titles held by the bank's. Another form of asset protection.

What is your intention when you reach this stage?

Cheers
 
There's essentially 3 options to hold the title that I see people employ when they pay off their mortgage.

1. They simply don't discharge the mortgage and leave it with the bank. They might still pay some ongoing fees to do this, but it's a very safe way to keep the title secure. I wonder if anybody from the bank ever has thoughts of stealing these out of their document storage facilities.

2. They hand it to their solicitor who keeps it in a safe. My solicitors office has a huge safe that's full of various documents. This is reasonably secure, but there is of course stories about the young lawyer who stole a bunch of titles, sold the properties and left the country.

3. They store it with other important documents, but in a lot of cases most people don't associate the value of their property with that piece of paper and they probably don't give it the security it deserves.

Another option would be to simply lodge a caveat over your own property. Someone can steal your title, but it makes it difficult for them to sell the property without your knowledge.
 
I'm with Matto - cash in an 100% offset, even if only $100k - available if you need some money in a hurry for major surgery or IP steal of the decade.
 
handyandy said:
Personally we have many properties that have no actual money owing but none the less all of them have a mortgage with the titles held by the bank's. Another form of asset protection.

What is your intention when you reach this stage?
Click to expand...

Andy, how do you keep a mortgage with no money owing on the property?
Or is it a matter of keeping a small mortgage with equivelent funds in the attached offset like matto is describing?

I recently discharged a loan and received the title (single piece of A4 paper) so I wonder how easy it really is for someone to use that piece of paper and refinance the property or sell it.

Surely there would be a money trail that would be easy to follow. Don't want to find out but its interesting to think about ways to protect something you own from scammers.
 
TingTong said:
Andy, how do you keep a mortgage with no money owing on the property?
Or is it a matter of keeping a small mortgage with equivelent funds in the attached offset like matto is describing?

I recently discharged a loan and received the title (single piece of A4 paper) so I wonder how easy it really is for someone to use that piece of paper and refinance the property or sell it.

Surely there would be a money trail that would be easy to follow. Don't want to find out but its interesting to think about ways to protect something you own from scammers.
Click to expand...

Re-read my post above. Lots of people simply leave the mortgage un-discharged with the bank. They can effectively owe zero (either via an offset account or simply refuse to discharge the mortgage).

It is quite possible to steal someone's paper title and sell the property. I imagine that there is a money trail, but from a criminals perspective that's where money laundering might come into it.
 
PT_Bear said:
Lots of people simply leave the mortgage un-discharged with the bank.
Click to expand...

So its possible to pay out the loan but still have an un-discharged mortgage?
Would lots of people do this for protection or other reasons?
I guess if you wanted to get finance later with a different lender then you'd pop into the branch and pick it up.
 
PT_Bear said:
There's essentially 3 options to hold the title that I see people employ when they pay off their mortgage.

1. They simply don't discharge the mortgage and leave it with the bank. They might still pay some ongoing fees to do this, but it's a very safe way to keep the title secure. I wonder if anybody from the bank ever has thoughts of stealing these out of their document storage facilities.

.
Click to expand...

Probably the best piece of advice I've received in ages. Well done PT !
 
PT_Bear said:
Re-read my post above. Lots of people simply leave the mortgage un-discharged with the bank. They can effectively owe zero (either via an offset account or simply refuse to discharge the mortgage).

It is quite possible to steal someone's paper title and sell the property. I imagine that there is a money trail, but from a criminals perspective that's where money laundering might come into it.
Click to expand...

i think leaving it with the bank holding the title and showing the property as still mortgaged even though the loan has been paid out is best option.

The scammers do titles searches and can prepare fake one's or in states with electronic titles don't need to make one just prove through id fraud thay are the owner. Bikie gangs were on to this big time in wa and sa, didn't sell property just took out big mortgage and kept the cash. Left three months payments in acc, by time collections were all over it they were 5-6 months gone.
 
I think you're correct Bigtone. Leaving the title with the bank has several benefits:

1. The physical title is held in secure document storage by the bank.
2. There is still a registered mortgage lodged with the Office of State Revenue. Even if the paper title was stolen, the property can't be sold without discharging the mortgage.
3. Even if all the above did occur, the bank has a duty of care to ensure that it doesn't. I imagine property owners have some sort of legal recourse.

Several times a year we see purchase settlements delayed because, "The vendors bank can't find the title". It's common enough and usually takes 2-3 days to resolve.

This thread has made me wonder how many titles go permanently missing from the bank, so the bank simply gets a duplicate made in those 2-3 days?
 
This a fantastic thread. Keep the ideas coming.

Time to get cash-out on the PPOR I think and shove it in an offset as a hedge.
 
TingTong said:
Yes this looks like the best option.
Keep the ideas coming.
Click to expand...


We have done both leaving the title with the bank and also LOC against the properties.

All up we have a actual LVR of about 5-6% but have another 30% available via LOC's as and when I need it.

Even if there are some bank fees (which are minimal) I see it as a form of insurance as the bank is going to take more care releasing the mortgage than the title office will regenerating a 'lost' title document.

Cheers
 
Bigtone said:
i think leaving it with the bank holding the title and showing the property as still mortgaged even though the loan has been paid out is best option.
Click to expand...

Agreed - not only do you save on bank vault fees...which offer the same level of security as the Banks, but you don't have to pay the discharge fee.

Those two small advantages are quite minor though.

The second biggest advantage is that scammers can see that a mortgage is present and so will target an easier mark, one without a mortgage....this has already been mentioned.

....but the biggest advantage by far, not mentioned as yet, is protection against home grown Aussie lawyers trolling the databases looking for big fat chunks of equity to sue your @$$ off with. Even though they can pay a nominal $10 or whatever to search your title deed on the public databases, what they can't search is how big the mortgage is.

For example ;

house worth 500K, no mortgage listed against title, yippee, 500K worth of equity to gouge into. No brainer for them, scope locked on - you're in their firing line.

house worth 500K, with mortgage listed against title, unknown amount of equity....could be nothing there to gouge into.....they'll likely move on.
 
Dazz said:
....but the biggest advantage by far, not mentioned as yet, is protection against home grown Aussie lawyers trolling the databases looking for big fat chunks of equity to sue your @$$ off with. Even though they can pay a nominal $10 or whatever to search your title deed on the public databases, what they can't search is how big the mortgage is.
Click to expand...

Well written Daz

I did mention it but not just as good as your example. I mentioned 'another form of asset protection' had your example in mind:p:D

Cheers
 
PT_Bear said:
1. They simply don't discharge the mortgage and leave it with the bank. They might still pay some ongoing fees to do this, but it's a very safe way to keep the title secure..
Click to expand...
From my experience and that is depending on who you bank with there is no charge at all and we have several unencumbered some for over 15 years plus the cost too get them out was about $175.00 from the last time i asked,and from experience during 2008 it makes it very simple to borrow against those titles when everything is spread over several banks..

But my question is if someone did try to take the titles out one would think the bank in question would ring the title holder and ask the question,they must have some failsafes in place,if they did not then you would have a very live legal case against the bank..
 
Great thread, most of these things I wouldn't of realised would have be the case. As a newbie, I'm learning valuable information on this site, thanks to all who post. :)
 
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